DOUGLASS TOWNSHIP — The complexities of oil and gas leasing leave many landowners feeling intimidated and pressured to make a quick decision.
More than 70 people packed Douglass Township Hall on Thursday evening to learn how to make smart decisions about whether to lease their land. The educational meeting was sponsored by Michigan State University Extension and the Michigan Farm Bureau.
Montcalm County is currently home to 30 oil wells, 10 brine disposal wells, nine natural gas wells and 190 gas storage wells.
Bill Mitchell, a geologist with the Michigan Department of Environmental Quality Office of Oil, Gas & Minerals in Lansing, started the meeting by explaining the basic process of applying for a well permit and how DEQ officials conduct field reviews and inspections.
“Most permits that come in, we send back for some reason or another,” said Mitchell, explaining how detailed the process is. “If the application meets all our conditions, we’re obligated by law to approve the permit.”
Curtis Talley Jr., a farm management educator with Michigan State University Extension, became the focus of the audience’s attention as he explained in layman’s terms how to understand basic oil and gas leases.
“For a lot of you, this is the first time you’ve dealt with this and you don’t have any idea how to go about it,” Talley noted. “You need to know the rules of the game, or you can leave a lot of money on the table. We want you to learn that you can make informed decisions, but oil and gas leasing is complicated.
“If you are a mineral rights owner, you are blessed,” he said. “But you also have to make many decisions. The lease is where you can make your money. What is in your lease longterm, especially for generations, is where you can make your money. You get one opportunity to do it right, and that’s before you sign.”
Talley said the United States is “awash” in natural gas and the price is down 433 percent since 2008. He said the price of oil per barrel is down from $147 per barrel in 2008 to $96 per barrel today, although it’s not apparent at the gas pump.
Talley’s advice to landowners included using multiple resources to research any company making an offer; hire an oil and gas attorney who has experience in dealing with these companies; base a lease on the landowner’s gross income instead of net income; get verbal promises in writing; and, most importantly, negotiate. He also cautioned landowners against immediately accepting a bonus, which seems like a sure thing, and urged landowners to focus on longterm lease details instead.
“Just about everything is negotiable in the lease,” he said. “You’d be amazed at how many landowners who are offered $25 per acre sign that lease on the spot, when they could have gotten $100 per acre. You’re under a lot of pressure, but if you’re not ready to sign, wait. Good leases take time and they will last a long time.”
Trent Hilding, an Edmore attorney specializing in agricultural services, addressed the issues of legal considerations involving oil and gas leasing. He specifically mentioned the local Bogart field, which recently saw a change in ownership, and other fields in the Crystal Township area.
“That first paragraph is extremely important,” Hilding cautioned of reading lease proposals. “You’ve got to be conscious of what they’re doing and what they’re after. We’re trying to give you resources to dig into it deeper so you can make an informed decision.”
“When you make a decision, you will hopefully feel confident doing it,” Talley added.